But first.....
Knowledge is Power (please read before you leap)
Buying your first home, finally getting those keys in your hands and opening the door of your new home can be a genuinely warm and fuzzy moment. You have jumped through all the hoops, signed mountains of paperwork and finally "it's all mine!"
You have probably heard this a million times before but buying a home will probably be the biggest purchase you will ever make. Therefore promise yourself that you will make an effort to gather as much information as far in advance as possible. When it comes time for you to make those big decisions (primarily which home and which mortgage) you won't feel like you are signing your life away. This is particularly important for first time home buyers.
While obviously you need to work with a good real estate agent and lender, totally relying on others can leave you feeling like you have little control over the process. Ultimately, the major decisions should be yours to make, not your agent's and not your lender's.
Many buyers who leapt into buying a home during the recent home buying frenzy did minimal homework in advance. They were so focused on how much they could borrow NOW and how big a home they could buy NOW that they neglected to focus on the basics. As a result many were taken advantage of by unscrupulous lenders, agents and others involved in the buying process. In addition, many buyers just over-extended themselves and choose to ignore the ballooning payments down the road. "Now" has passed and tomorrow is here and unfortunately along with it has came short sales and foreclosures. If you can learn from the mistakes of others, you will be way ahead of the pack.
Assuming I haven't scared you off completely, let's move to step #1 of the steps to buying a home.
Step 1 Is Buying a Home Right for Me?
The reasons for wanting to buy your own home or stay renting are numerous and will be different for each person:
For example, dedicated renters might say:
- I could never afford to buy a home and my credit score is not so good
- I don't want to be tied down to one location and haven't decided where I want to live.
- I'm afraid of losing my job
- I like having someone else be responsible for taking care of the repairs and I don't have to pay for them.
While homeowners who decided to take that leap might say:
- I worked on improving my credit and saved for a down payment. It took me some time and perseverance but I'm happy I did so.
- I just wanted a place to call my own.
- I felt that I was pouring money down the drain and making the landlord richer.
- I wanted to start building some equity and take advantage of the tax benefits
Basically, buying a home is not for everybody, whether for financial reasons or you are just content to be a full time renter. Renting has many benefits as does owning your own home.
If you are a renter and you believe that you would not qualify for a mortgage but would like to buy a home, talk to an agent or lender. The worst that could happen is that your suspicions are confirmed but at least you will know what you need to do to improve your credit score and chances of qualifying the next time around.
Please click here for additional subjects related to "is buying right for me".
The pros and cons of home ownership.
Equity and tax benefits.
Continue to Buyer's step 2. Financing my new home
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